SAVINGS · TAX · APRIL 2027
Cash ISA Changes from April 2027: £12,000 Limit and 22% Non-Cash ISA Charge Explained
The overall ISA allowance is not falling to £12,000—and ordinary Cash ISA interest is not facing a new 22% charge. Here is what the announced rules actually change.
From 6 April 2027, people under 65 will generally be limited to £12,000 of new Cash ISA subscriptions each tax year, while the overall ISA allowance remains £20,000. A separate 22% charge will apply to interest on cash held inside non-cash ISAs—not to interest earned in an ordinary Cash ISA.
The £12,000 limit concerns new Cash ISA contributions. The 22% measure concerns cash parked inside Stocks and Shares or Innovative Finance ISAs. They are two related but different rules.
if under 65Remaining allowanceOther eligible ISA subscriptions
The changes at a glance
| Rule from 6 April 2027 | Person under 65 | Person aged 65 or over |
|---|---|---|
| Overall annual ISA allowance | £20,000 | £20,000 |
| Cash ISA subscription limit | £12,000 | £20,000 |
| Cash interest inside a non-cash ISA | 22% charge | 22% charge |
| 100% cash-like investment in a non-cash ISA | Restricted | Restricted |
The higher Cash ISA limit applies from the beginning of the tax year in which a person turns 65. The announced anti-circumvention measures, including the charge on cash interest in non-cash ISAs, are intended to apply regardless of age.
What the £12,000 Cash ISA limit means
An ISA allowance controls how much new money you may subscribe during a tax year. It is not a cap on the total value that may remain invested or saved inside ISAs accumulated over several years.
For someone under 65, the proposed structure from 2027/28 is:
- Up to £12,000 may be subscribed to Cash ISAs.
- Up to £20,000 overall may still be subscribed across eligible ISA types.
- Using the entire £12,000 Cash ISA limit would normally leave up to £8,000 of the overall allowance for another eligible ISA.
- Contributing less to a Cash ISA leaves more of the £20,000 overall allowance available for other ISA types.
This does not mean everybody should automatically invest the remaining amount. A Stocks and Shares ISA carries investment risk, and money can fall in value. The appropriate mix depends on when the money is needed, the saver’s emergency fund and their ability to accept losses.
The 22% charge: what it does—and does not—cover
Stocks and Shares ISAs may hold some cash temporarily, for example while an investor decides what to buy or after an investment is sold. The Government’s announced design applies a flat 22% charge to interest or an alternative-finance return paid on cash held inside a non-cash ISA.
The policy is intended to prevent someone from using an investment ISA as a substitute Cash ISA after reaching the lower Cash ISA limit.
Under the published design, the ISA manager pays the charge to HMRC. The investor will not need to declare the relevant ISA interest. That does not necessarily mean the manager absorbs the economic cost: the return credited to the account may reflect the charge.
A worked example of the 22% charge
Suppose £10,000 is left as cash inside a Stocks and Shares ISA for a full year and earns interest at an illustrative 4%:
The example is not a comparison with ordinary taxable savings. Interest outside an ISA is governed by separate savings-income rules, including the Personal Savings Allowance where available. The published policy states that the Personal Savings Allowance will not offset the 22% ISA charge.
What happens to existing Cash ISA savings?
The change is to the annual subscription limit from 6 April 2027. It does not retrospectively remove money already held in a Cash ISA or convert earlier tax-free subscriptions into taxable savings.
Interest and investment growth inside an ISA also do not ordinarily use additional annual allowance. The allowance is generally measured when new money is subscribed, not when an existing balance earns a return.
Transfers need more care. The announced reform includes restrictions designed to prevent people under 65 moving funds from non-cash ISAs into Cash ISAs as a workaround. Anyone planning a transfer near the rule-change date should check the final regulations and their provider’s process before giving instructions.
Three examples of how the allowance could be used
| Illustrative subscriptions | Cash ISA | Stocks and Shares ISA | Total used |
|---|---|---|---|
| Cash-focused saver under 65 | £12,000 | £0 | £12,000 |
| Split between cash and investments | £12,000 | £8,000 | £20,000 |
| Lower cash contribution | £5,000 | £15,000 | £20,000 |
These examples demonstrate the limits, not what somebody should choose. Investments are not a cash substitute: their value can fall, particularly over shorter periods.
What savers should check before April 2027
- Separate old balances from new contributions. The new limit concerns subscriptions made in the 2027/28 tax year.
- Check your age position. A person turning 65 during the tax year is expected to receive the higher limit from the beginning of that tax year.
- Review why cash sits inside an investment ISA. Short-term transaction cash is different from leaving a large balance uninvested indefinitely.
- Do not invest merely to avoid the Cash ISA limit. Keep emergency and near-term money aligned with your needs and risk tolerance.
- Check transfer rules before acting. ISA transfers should normally be completed through the receiving provider rather than by withdrawing and redepositing money yourself.
- Recheck the final rules. Supporting regulations and provider procedures should be confirmed before the change takes effect.
Confirmed direction versus details still to monitor
The Government has announced the April 2027 policy direction and published an anti-circumvention factsheet and HMRC savings newsletter. The announced core measures include the £12,000 under-65 Cash ISA limit, the 22% charge on cash interest in non-cash ISAs and restrictions intended to prevent workarounds.
Secondary legislation is expected ahead of commencement. Product-level treatment, transfer processes and other operational details may therefore need checking again. MoneyMeasure will update this guide when authoritative implementation information changes.
Frequently asked questions
Is the overall ISA allowance falling to £12,000?
No. The overall annual ISA subscription limit is scheduled to remain £20,000. From 6 April 2027, the amount a person under 65 can subscribe to Cash ISAs will be limited to £12,000 within that overall allowance.
Will interest in an ordinary Cash ISA face the 22% charge?
No. The announced 22% charge concerns interest or alternative-finance returns on cash held inside a non-cash ISA, such as a Stocks and Shares ISA or Innovative Finance ISA. It is not a new charge on interest earned inside an ordinary Cash ISA.
What happens to money already in my Cash ISA?
The £12,000 figure is an annual subscription limit for new contributions from 6 April 2027. It does not remove money already held in a Cash ISA or retrospectively reduce earlier ISA subscriptions.
What if I am 65 or older?
The Cash ISA subscription limit is scheduled to remain £20,000 for people aged 65 or over. The higher limit applies from the start of the tax year in which the person turns 65.
Can I still put £20,000 into a Stocks and Shares ISA?
Yes. The Stocks and Shares ISA subscription limit and the overall ISA limit are scheduled to remain £20,000. If you subscribe £12,000 to a Cash ISA, you could generally use the remaining £8,000 of the overall allowance in another eligible ISA, subject to the applicable rules.
Who pays the 22% charge?
Under the announced design, the ISA manager pays the charge to HMRC. The individual does not declare that ISA interest to HMRC. The economic effect may still be reflected in the return credited to the account.
Are these rules final?
The Government has announced the policy for 6 April 2027 and published implementation material. Secondary legislation is expected ahead of commencement, so operational details should be checked again before acting.
The bottom line
The headline change is a £12,000 annual Cash ISA subscription limit for people under 65 from 6 April 2027. The overall ISA allowance remains £20,000, and people aged 65 or over retain a £20,000 Cash ISA limit.
The separate 22% measure is frequently misunderstood. It applies to interest on cash held within a non-cash ISA; it is not a charge on interest inside an ordinary Cash ISA.
For guidance on how savings interest and deductions interact with employment income, read the MoneyMeasure guide to UK tax codes and National Insurance or use the salary calculator to estimate take-home pay.
Important information and sources
MoneyMeasure provides general information and illustrations, not personalised savings, investment or tax advice. ISA rules, provider terms and individual circumstances can differ. Investments can fall as well as rise in value.
Primary sources: ISA reform 2027 factsheet, HMRC Tax-Free Savings Newsletter 22 and the Budget 2025 tax legislation overview.
Read our methodology and disclaimer.
Published and last reviewed: 30 August 2026.